CARES act forgivable loans for businesses

[MISurveyor]

Same here. Fifth Third was way behind. Their forms were all supposed to be online but as usual the was a problem with the system for some users, me included. My branch manager called me and filled out the paperwork and submitted it. I haven't heard anything back yet.
I also filled out the EIDL paperwork and haven't heard back on that either. Hopefully by the end of the week.

Sent from my SM-G950U using Tapatalk

 

[007hunter]

Just got my paperwork submitted today. I bank with a smaller regional and they weren’t ready til early this week. Also had a couple questions they were slow to answer. Guess we will see what happens.

I got the waiver to finish the job we were currently working before being shut down. So we will finish that up and then shut down again. Hoping this doesnt last much longer.

 

[wysongdog]

Got all of ours in. Got approved but now my bank is working on the documents to make sure it's all right and nothing is messed up. Was approved Monday but bank is having issues now with paperwork to fund it....

 

[NickWhittle]

My boss had to close the company because of unpaid loans.

 

[NDGuy]

Has anyone gotten forgiveness approved yet?

 

[Billy Goat]

Has anyone gotten forgiveness approved yet?

Nope, not that I'm aware of. Can't get the banks to process it here, been told it's on the feds end.

 

[NDGuy]

Nope, not that I'm aware of. Can't get the banks to process it here, been told it's on the feds end.

Same. I was curious we have our first repayment due next month. We saved nearly all the $ in case it doesn't get forgiven.

 

[Wapiti7]

I'm a dork CPA and pretty tied into this PPP crap. The banks are waiting on SBA for more guidance. SBA is waiting on Congress to pass additional legislation. Something has to get done because there is no way for banks to deal with forgiveness on 5 million borrowers under the current law. They will likely say loans less than $150k have a super streamlined forgiveness process (like a 1 page certification). I'm hearing that loans between $150k and $2m will only have to submit the forgiveness app (Form 3508 or 3508EZ). You are responsible for keeping all the calculations and documentation supporting that app in case of audit but don't have to give it to banks upfront. I am telling clients to not submit applications now because the banks are required to follow existing law (and have to do some level of underwriting). Hurry up and wait for the geniuses in Congress to act. You have 10 months from funding date to apply for forgiveness, so no rush. Under the Flexibility Act, payment deferral got significantly extended. Again, no rush. The more I have looked at this, the main issue for many is going to be headcount...but there are so many outs, damn near everybody should get 100% forgiveness. We still need Congress to act on the taxability of this. The law says forgiveness income is tax free, but IRS countered with a position that says the expenses used to claim the forgiveness are not deductible, which is bullshit and not what Congress intended. It is probably a $200 billion question, so they need to act. Sorry for the boring tax lesson on hunting forum.

 

[menhaden_man]

Yeah, we're waiting for guidance, too... we didn't lay anyone off so should be good on head count. Also not sure how to tackle the tax question and when we move these dollars around in the books.

Thanks for the insight @Wapiti7 keep us posted on anything new and exciting.

 

[Billy Goat]

Same. I was curious we have our first repayment due next month. We saved nearly all the $ in case it doesn't get forgiven.

That's a great position to be in, a lot better than being 7 weeks into the original 8 week timeline and they changed the deadlines.

 

[txhunter581]

As the CPA points out above, as it sits right now the PPP loan IS taxable as income.

But through the back door. No, the forgiven loan isn't income, but as stated, you can't deduct the normal business expenses you used it for (payroll, etc), so it ends up being income and subject to income tax UNLESS Congress acts. So I am preparing to make a HUGE quarterly tax estimate payment on Jan 15 unless something changes before then.

 

[NDGuy]

Again, no rush. The more I have looked at this, the main issue for many is going to be headcount...but there are so many outs, damn near everybody should get 100% forgiveness. We still need Congress to act on the taxability of this. The law says forgiveness income is tax free, but IRS countered with a position that says the expenses used to claim the forgiveness are not deductible, which is bullshit and not what Congress intended. It is probably a $200 billion question, so they need to act. Sorry for the boring tax lesson on hunting forum.

So I am a dumbass for applying for forgiveness already? We received money in May I believe (only 5k) and saved all of it in case it's forgiven. My wife was mandated to be out of work for 2.5 months. We had savings and scrapped by but took the loan in case anything worse happened. So even if I pay the loan back 100% tomorrow I pay taxes on it? What kind of horseshit is that?

 

[Axlrod]

So I am a dumbass for applying for forgiveness already? We received money in May I believe (only 5k) and saved all of it in case it's forgiven. My wife was mandated to be out of work for 2.5 months. We had savings and scrapped by but took the loan in case anything worse happened. So even if I pay the loan back 100% tomorrow I pay taxes on it? What kind of horseshit is that?

IF you pay it back there would be no forgiveness and the taxable amount would be zero.

 

[Kimber7man]

As the CPA points out above, as it sits right now the PPP loan IS taxable as income.

But through the back door. No, the forgiven loan isn't income, but as stated, you can't deduct the normal business expenses you used it for (payroll, etc), so it ends up being income and subject to income tax UNLESS Congress acts. So I am preparing to make a HUGE quarterly tax estimate payment on Jan 15 unless something changes before then.

yep. Jan 15 is gonna be huge here too

 

[Lyeatman]

Lots to unpack on this one. I don’t know a ton about elk hunting, but I am over the PPP program at my institution, so hopefully I finally can add to a forum that has provided me tons of information.

The portal to submit applications to the SBA is open for processing. Each day we are processing and submitting applications for forgiveness. As of the date of this reply the SBA has not processed a single application yet. The last number I have seen is there have been over 93,000 applications submitted with zero approved so far. With that being said, it looks like they are planning to start the forgiveness process on their end tomorrow (Friday) or next week.

There has been guidance to us to not send a 1099-C to borrowers once their loan is forgiven.

Our running joke is that we are all flying this plane together while still putting one of the wings on.

We are still recommending to all businesses that received under $150k to hold on and maybe congress will pass something to “fix” the problem that they have created.

Hope that’s helpful on the backside of this mess. I’ll let Axlrod handle keeping everyone up to date on the tax effects.

 

[Wapiti7]

Daily Dork CPA Update
For those of you who are planning on making large estimated payments in January because of the potential for taxability of this...I do not think that is necessary in most cases. I highly doubt many of these will run the full forgiveness process by year end. The bank has 60 days to act on forgiveness applications and SBA has 90 days to act once lender sends to them. I just don't see many of these getting done by year end. If it doesn't, then at year end you still have a liability on your books and not income. Depending upon how November 3rd goes, we might very well wish that those funds are taxable in 2020, but practically, I don't see it happening. FYI, ranking members of both parties have said they wanted this to be 100% tax free and they would pass legislation to do just that. Personally, I still think they will.

As a side note, with the PPP covered period (spend period) increasing to 24 weeks (at election of borrowers), I suggest employers also consider claiming any credits against 941 taxes for compensation paid to employees for 1) emergency paid sick leave and 2) expanded FMLA coverage (i.e. employees that are being compensated because they have to stay home with kids as a result of a school/day care closure because of the 'Vid). You can't use expenses to both claim the credit and for forgiveness (no double dipping) but 24 weeks is likely plenty of time to fully spend PPP $'s. Do NOT claim the retention credit if you are a PPP borrower.

 

[Blackcats06]

I'm not sure why any of you thought these loans would actually be forgiven. Just look at the student loan forgiveness program and you'll get your answer

 

[Wapiti7]

SBA has issued a new forgiveness application, Form 3508S, link included below. It is available for use if your loan was $50k or less. Provides for a super streamlined forgiveness process...more of a pinky swear approach.

https://home.treasury.gov/system/files/136/PPP-Loan-Forgiveness-Application-Form-3508S.pdf

 

[NDGuy]

SBA has issued a new forgiveness application, Form 3508S, link included below. It is available for use if your loan was $50k or less. Provides for a super streamlined forgiveness process...more of a pinky swear approach.

https://home.treasury.gov/system/files/136/PPP-Loan-Forgiveness-Application-Form-3508S.pdf

I am so annoyed by all of this. We sent in our forms for forgiveness like 2 months ago already and now they are coming out with new, easier forms lol

 

[Wapiti7]

FYI-IRS issued some guidance last week (Rev Rul 2020-27 and Rev Proc 2020-51). Nothing earth shattering, basically just reaffirms IRS' position that the expenses used to claim forgiveness are not deductible. However, one thing IRS did clarify is timing...they basically said that if you have forgiveness or reasonably expect to have forgiveness by 12/31/20, then the expenses are not deductible in tax year 2020.

I am still having a hard time with IRS' position because it is clearly against Congressional intent. There was no reason for Congress to specifically put in the CARES Act that forgiveness income was not taxable, unless they intended the whole thing to be tax free. Oftentimes, Tax Court cases indicate that they believe Congress didn't understand their own legislation, but that was clearly not the case here. Ranking members of both parties expressly stated the Congressional intent with a letter to Mnuchin on May 5, 2020...see link below:

https://www.grassley.senate.gov/sites/default/files/2020-05-05%20CEG%2C%20RW%2C%20RN%20to%20Treasury%20%28PPP%20Business%20Deductions%29.pdf

If Congress doesn't act to clarify or Yellen doesn't force a change in IRS position, it's going to be the Wild West on 2020 filings. Remember, IRS doesn't write the tax law, Congress does. Just because they publish their opinion, doesn't mean it is law...and this time, I think they're flat wrong.